DWP decision to permit local authorities to effectively stockpile unspent discretionary housing payments is welcome, but there is a flip side
The true costs
The decision by the Department for Work and Pensions to permit local authorities to effectively stockpile unspent discretionary housing payments and keep the funds for when they are most needed is welcome.
The depressing flip side to this is that it is certain these funds will be required once the cuts in welfare spending fully begin to bite over the next two years. What is also certain is that, despite the best squirrelling efforts of council housing and welfare teams, the money available will in no way meet demand. The Chartered Institute of Housing calculates that welfare reforms will cut £1.6 billion, while the DHP budget is being increased to just £165 million in 2013/14.
It is clear that housing providers of all colours will need to look elsewhere to ensure affected tenants are suitably housed while also ensuring their rental income does not suffer a dramatic fall from measures such as the bedroom tax and direct payment of housing benefit to tenants.
It is timely, therefore, for the Homes and Communities Agency to this week publish a report into the costs of English housing associations. This is sensitive territory and the HCA is quick to acknowledge it is not the final word on the sector’s performance. However, the finding that only around half of the variations in cost can be accounted for by differences in the type of organisation should give executives and board members pause for thought. There may be perfectly good reasons why a landlord’s costs are significantly higher (or lower) than its peers, but boards will need to satisfy themselves that they can justify this.
Equally, while the HCA is right to point a spotlight in this way, it should also acknowledge that landlords know their businesses best and most have already been scrutinising their performance against their peers for a number of years. It is also unclear from the HCA’s work the extent to which factors such as community investment are fully accounted for in its analysis. Undoubtedly there are still inefficient landlords, but, as the pressure from welfare reform demonstrates, they cannot afford to remain that way.